MGT Notes

Reference, ‘Principles of Economics,’ by N. Gregory Mankiw, 3e, Pg 8

The first principle of Economic Interaction deals with trade. Just as with individuals or households, countries can be partners as much as competitors. As an example, a country may compete with another in advancing technology. This does not imply isolation, since they could gain from co-operating along other dimensions such as agriculture (for example). Countries can specialize in what they do best and in this way trade between two countries can make each better off since they are able to buy a better variety of goods and services at lower cost.